Bill
S 4554
Automatically enroll most new state employees and allow local employers to adopt automatic enrollment in deferred compensation plans to boost retirement savings.
Title shown in the legislature: Relates to World Trade Center benefits
Substantive subject of the law: Automatic enrollment in State, municipal, county and local deferred compensation plans
Status and key dates
- Introduced: June 2, 2025
- Passed Senate: June 13, 2025
- Passed Assembly (as substituted): June 16, 2025
- Delivered to Governor / Signed: September 10, 2025 — Enacted as Chapter 390 of 2025
Purpose
- To authorize and standardize automatic enrollment arrangements for deferred compensation plans offered by the State, counties, municipalities and certain local authorities, and to require automatic enrollment of most new State employees into the State Employees Deferred Compensation Plan.
Key provisions
- Amends P.L.1977, c.381 (C.43:15B‑1) and P.L.1978, c.39 (C.52:18A‑165).
- Local employers (counties, municipalities, authorities) may adopt automatic enrollment features in their deferred compensation plans. Such arrangements:
- Permit an employer to defer and deduct a default percentage of an employee’s pay unless the employee affirmatively opts out or elects a different percentage;
- Require the plan to establish a default deferral percentage, may provide for periodic escalation of the deferral rate, and may provide for periodic default reenrollment of nonparticipating or under-participating employees;
- Require notice to employees and a reasonable opportunity to opt out or change the election;
- Require designation of a default investment option for employees who do not make an investment election;
- Treat the default deduction as a written, voluntary salary deferral agreement for related legal purposes.
- State employees: the Board administering the State plan must automatically enroll employees hired on or after the January 1 following the law’s enactment (given the Sept. 10, 2025 signing, that would be Jan. 1, 2026), subject to specified exceptions. The Board may exempt classes (e.g., part‑time, seasonal, temporary).
- Collective bargaining exception: where employees are represented by a majority representative under the New Jersey Employer‑Employee Relations Act, the employer must negotiate terms (including whether to auto‑enroll, default percentage, and default investment) with the union. Absent agreement, represented employees must affirmatively elect to join.
Who is affected
- New State hires (automatic enrollment requirement); current State employees only if the Board adopts broader application.
- County, municipal and local authority employees — employers are given authority (but not required) to implement automatic enrollment.
- Public employers’ payroll and benefits administration (implementation and notice procedures).
- Unionized employees and public employers — negotiable subject to collective bargaining.
Impact and implementation notes
- Aims to increase participation in retirement savings and increase retirement savings rates via default enrollment and escalation features.
- Shifts administrative duties to plan fiduciaries and payroll offices (selection of default percentage/investment, notice, opt-out processing, periodic reenrollment/escalation).
- Requires negotiation with unions where applicable, potentially delaying or altering implementation for represented employees.
- Effective timing: automatic enrollment for State hires applies beginning with hires on/after Jan. 1 following enactment (Jan. 1, 2026, given the Sept. 10, 2025 enactment).
Compiled from official sources — confirm details with the bill’s official record.
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